London - XINHUA
Britain moved perceptibly closer to a rise in the Bank Rate with the first split vote among Monetary Policy Committee (MPC) members for three years on whether to increase the current 0.5 percent rate.
For the first time since the July 2011 meeting of the MPC, two members broke ranks and backed a 0.25 percentage point rise in the record low rate.
The two dissenting members, Ian McCafferty and Martin Weale, are from the four external members of the MPC. The two disagreed, with the MPC meeting minutes unveiled Wednesday noting "the degree of spare capacity had diminished sufficiently" to allow a rate rise.
The MPC meeting minutes noted "there would be merit in waiting to see firmer evidence that solid increases in pay growth were in prospect before tightening policy".
The prospects of a rate rise may look closer because two members of the MPC now back it, but their arguments have not won the other committee members over yet.
James Knightley, chief UK economist at ING Bank, noted, "We suspect that Weale and McCafferty will remain in the minority for a while yet. Yesterday's low inflation numbers, the lack of wage growth and concerns about Eurozone growth ...... suggest that in the absence of upside activity data shocks the majority will continue to opt for the status quo in the next few months."
Other economists had divergent view.
Simon Wells, chief UK economist at HSBC Global Research, foresaw a rise early next year, and noted, "With soft wage and inflation data since the August meeting, we still think a February 2015 rate rise is most likely."
Phillippe Gudin, chief European economist at Barclays, believed the dissenters would soon gain support.
He noted, "We believe these arguments are likely to be endorsed by more members over the coming months, especially since we forecast the economy continuing to grow strongly and the unemployment rate to drop further."